Professional Documents
Culture Documents
Daimler Ir Annualreport 1994
Daimler Ir Annualreport 1994
6 Board of Management
8 Report of the
Board of Management
8 Business Review
14 The Corporate Units at a Glance
16 Operating Activities of the Group
40 Central Corporate Functions
68 Financial Statements
89 Supervisory Board
94 Daimler-Benz in Figures
The Corporate Principles of Daimler-Benz
Our work at Daimler-Benz serves We aim to learn better and faster Our core businesses include vehicles
people and their environment. We than our competitors. To achieve for passenger and freight transportation,
aim to offer the world's most advanced this, we need not only flexible organiza- rail systems, aerospace, propulsion
products, systems and services. tional structures but also employees systems, defense systems, automation,
This requires a continual commit- who think entrepreneurially. energy systems technology and inform-
ment to technical, business and social Key to our success are employees ation-technology services. In these
innovation as well as a corporate culture with a sense of responsibility, inde- areas, Daimler-Benz strives to be a
characterized not by complacency, but pendence, creativity, drive, teamwork world leader.
by creative unrest. and openness to new ideas. We there- Furthermore, we are active in
In a world increasingly complex, with fore promote every employee's personal certain specialized areas, such as
promising opportunities - but also risks - development to the best of our abilities. applied microelectronics, selected
even minor events can take on conse- financial services, and countertrading,
quences of major proportions. There- Daimler-Benz does business in all where we aim to be highly competitive.
fore, we must carefully weigh our every corners of the globe. We are con- To a great extent, these activities inter-
action. vinced of the advantages to everyone of link our core business areas.
We owe it to future generations to open trade borders throughout the Each of our business areas falls
use our natural resources prudently and world. Therefore, we view competition under the responsibility of one of our
sparingly. This sense of responsibility as a welcome proving ground. The four corporate units. Thus, Mercedes-
must be reflected in all our thoughts and measure of our success is the recog- Benz, AEG Daimler-Benz Industrie,
activities throughout the Group. nition our work receives, and economic Daimler-Benz Aerospace and Daimler-
success is an undeniable part of this Benz InterServices (debis) work together
Our customers are the focus of our recognition. under the umbrella of Daimler-Benz, the
efforts. We must strive not just to Inherent to our philosophy is respect managing holding company of our
meet their expectations, but to exceed for other cultures. As an international group.
them. Cooperation and the open ex- company, we reject all forms of dis-
change of know-how throughout all crimination. This principle applies,
areas of our companies are central to moreover, to the filling of management Our cooperation aim to:
meeting this goal. positions, where we will extend equal
Just as we are accountable to our opportunities to every employee Combine know-how and experi-
customers, we are equally responsible regardless of nationality. ence to create new dimensions -
to the companies' owners as well as to Responsibly promoting progress
the public. This means we must be Daimler-Benz is an integrated for everyone.
willing to provide feedback to others and technology group. This means that
to assess ourselves openly and honestly. our various business areas are linked by We are proud to continue a distin-
cross cutting technologies and system guished tradition guided by these
structures. We place a special emphasis principles.
on our know-how and experience in
traffic management systems and trans-
portation technologies.
Business Review
Against the backdrop of the improved global economic environment, sales Mercedes-Benz Passenger Cars:
in the Daimler-Benz group rose to DM 104.1 billion in 1994. This was the Market Position Strengthened
first time we topped the DM 100 billion mark. With the exception of DASA, Worldwide
all corporate units contributed to the 7% growth. The steps we took to The international automobile boom
reduce costs and improve production processes were clearly successful. gained momentum again in 1994. In
Along with the business expansion, these were primary factors in the Western Europe the market situation
significant progress we made in 1994 toward a generally satisfactory was more favorable than in the crisis
profit position. year 1993, following the general eco-
nomic recovery. While positive market
stimuli came from the U.S.A. and the
Global Economic Environment Carried by the momentum of invest- newly industrializing countries, the
Much Improved ment activity, economic growth in the demand for cars in Japan stagnated at
The global economic upswing was U.S.A. accelerated. To avert the dangers a low level. Worldwide passenger car
significantly stronger in 1994. The natio- of an overtaxed economy, the U.S. production rose 5% to 36.1 million
nal economies of Western Europe, in Federal Reserve Bank was obliged to vehicles.
particular, were able to emerge from the resort to higher prime interest rates Mercedes-Benz sold 592,400 cars,
recession surprisingly fast. Appreciable several times in 1994. achieving above-average growth in
stimuli for economic recovery initially Until the end of 1994 the Japanese almost all major regions. Even in the
came from trade within Europe and from economy was not able to join the stagnating German market, sales of new
exports to Asia, North America and the general upswing. The primary factor Mercedes-Benz vehicles increased by
former East Bloc countries. It was not here was domestic demand. Japanese 19% to 249,800, so that our market
until the latter part of the year that the industrial exports are still hampered share rose from 7.0 to 8.2%. Outside
economic boom was supported by by the strong yen. Germany we sold a record 341,300
investment activity as well. Rounding off the generally positive passenger cars, exceeding the figure
The German economy - starting with global economic picture was sharp of the previous year by 18%.
expanding foreign trade - is on the road growth in the newly industrializing The generally favorable market
to recovery. Although the healthy growth countries of Asia and Latin America, situation enabled us to increase
in the New Federal States was financed as well as early signs of stabilization in production by 23% to over 590,000
largely through western transfers, the several former East Bloc countries. passenger cars; thus we produced at
first signs of more efficient economic full capacity.
structures began to emerge there. Group Sales Top DM 100 Billion
Through massive layoffs and significant for the First Time Mercedes-Benz Commercial
enhancement of productivity, German Daimler-Benz group sales climbed to Vehicles: Sales Increase Sharply
industry was able to improve its inter- DM 104.1 billion in 1994. This repre- The trends in the commercial vehicle
national competitiveness, thereby sents an increase of 7% over the figure markets were also predominantly positi-
strengthening its position in the export for 1993 considering significant changes ve. The largest contributing factor to the
markets. in consolidation. Sales in the European recovery in Western Europe was the
Union, at DM 59.9 billion, were 4% large replacement need and the growing
higher than the 1993 level; in Germany, demand for transport capacity. The
they rose 3% to DM 39.0 billion. We truck business in the U.S.A. was espe-
achieved above-average growth in the cially brisk in classes 7 and 8 (over 11.8
U.S.A. with sales of DM 18.3 billion tons). The total world production of
(+13%) and in the other markets with commercial vehicles rose by 12% to
DM 25.9 billion (+11%). 14.2 million units.
Excluding deliveries within the group,
Mercedes-Benz generated 66%, AEG
Daimler-Benz Industrie 10%, Daimler-
Benz Aerospace 16%, and debis 8% of
the group sales.
Note:
The Business Review is the combined audited
Business Review of Daimler-Benz AG and the
Daimler-Benz group.
Business Review
Unit sales for Mercedes-Benz Sales at Daimler-Benz Aerospace
commercial vehicles rose 14% in 1994 (DASA) Decline
to 290,400 units. The growth stimuli On January 1, 1995, the corporate
came mainly from North America, other unit Deutsche Aerospace was renamed
Western Europe countries and Latin Daimler-Benz Aerospace. This step not
America. In Germany, however, our only underscored the affiliation with the
registrations of new vehicle dropped Daimler-Benz group, it also took into
4% to 79,000 because of the difficult account the growing internationalization
market situation throughout the of the aerospace industry.
industry. Although the demand for air travel
The production volumes of our rallied in 1994, the positive trend did
foreign subsidiaries reached a new high not carry over to the market that is
of nearly 148,900 commercial vehicles. important to Daimler-Benz Aerospace,
A total of 291,900 commercial vehicles the aircraft market. Furthermore, budget
rolled off the assembly line at our 46 cutbacks of public contractors for space
German and foreign production sites. and defense systems hurt DASA's
business.
AEG Daimler-Benz Industrie In particular, the sales decline in the
Expands Slightly Aircraft Division, which accounted for
The general economic upswing in roughly 50% of DASA's business, result-
1994 was felt in the German electrical ed in a 7% drop in overall sales to DM
engineering industry only after some 17.4 billion. On the other hand, incoming
delay. While the foreign demand in- orders totaling DM 16.4 billion repre-
creased as the year progressed, orders sented a slight growth of 5%. Significant-
from Germany showed signs of a weak ly higher orders in the Aircraft Division
revival only after the midpoint of the stood in contrast to declines in the other
year. Trends varied widely for the indi- divisions.
vidual product groups in the electrical Against the backdrop of a difficult
engineering industry. Incoming orders economic situation, we proceeded with
and sales of capital goods relevant to the capacity adjustments and structural
AEG Daimler-Benz Industrie continued improvements already begun at DASA.
to decline. In addition, we established several joint
New orders for AEG Daimler-Benz ventures with international partners in
Industrie reached DM 11.5 billion. 1994 to increase our competitiveness
Calculated on a comparable basis, i.e. worldwide.
after adjustment for the values of the
discontinued activity in household debis Continues to Pursue
appliances, meters and lighting systems, Growth Course
this represents a 6% growth. Both the The services relevant to Daimler-
German (+4%) and foreign markets (+8%) Benz InterServices (debis) contributed
contributed to this increase. Sales in disproportionately to the overall eco-
1994 reached DM 10.3 billion. Com- nomic recovery. Debis was able to
parably calculated, this represents a increase its sales by 14% in 1994, to
5% growth. DM 10.8 billion. Even when additional
companies were integrated in the
course of the business expansion, debis
continued to grow primarily on its own
strength.
Business Review
Sales in the Systemhaus Division Purchasing Volume Exceeds Level the new A-class and the small roadster
rose 9% to DM 1.8 billion, while in of Previous Year (SLK). An important foreign project in
Financial Services they increased 12% to In 1994 the Daimler-Benz group 1994 was the new plant in Tuscaloosa,
DM 7.6 billion. Business was especially purchased goods and services world- Alabama, where production of the
good in the mobile communications wide in the amount of DM 61.1 billion recreational All Activity Vehicle (AAV)
market. Through the acquisition of (1993: DM 56.7 billion). Nearly 70% of is scheduled to begin in 1997.
Bosch Telecom Service, which holds the purchases pertained to Mercedes- In the Commercial Vehicles Division,
second place in its sector, debitel was Benz, 9% to AEG Daimler-Benz Industrie, approximately DM 1.3 billion were ex-
able to significantly increase its market 14% to Daimler-Benz Aerospace, and 8% pended worldwide to prepare for new
share in Germany. to Daimler-Benz InterServices. vehicle generations and to adjust cur-
The 8% increase in purchasing vol- rent product lines to changing customer
Personnel Adjustments Necessary ume is primarily due to the higher pro- demands. In Europe, the focus was on
The Daimler-Benz group had duction level, especially for Mercedes- preparations for two new van families,
330,551 employees at the end of the Benz, as well as to our activities to Sprinter and City Transporter, model
year (366,736 in 1993). The cutback further reduce vertical integration. updates for the light, medium and
affected above all the workforce in Because we stepped up our global heavy-duty truck classes, and the switch
Germany, where the number of em- sourcing activity, material purchases to environmentally friendly EUR02 en-
ployees dropped from 284,576 to from foreign sources continued to gines. The MB 700, a light-duty truck
251,254. At the end of 1994 Mercedes- increase. We purchased goods and produced in Indonesia for the Asian
Benz had 197,568, AEG Daimler-Benz services from the New Federal States in market was an additional investment
Industrie 44,769, DASA 75,581, debis the amount of DM 1 billion in 1994. The focus.
9,226, and Daimler-Benz AG 3,407 billion-DM threshold was thus reached Capital expenditures at AEG
salaried and hourly-paid employees. one year ahead of schedule, a success amounted to DM 0.6 billion; at DASA,
For group management tasks, all in all primarily attributable to the "Purchasing DM 0.7 billion; at debis, DM 0.2 billion;
520 employees were employed at Drive in the New Federal States". and at headquarters, DM 0.1 billion.
headquarters. Additions to leased equipment
The adjustment of capacities to an Investments for the Future totaled DM 5.6 billion (1993: DM 5.9
internationally competitive level, initia- The investments in property, plant billion). The amount of outside capital
ted in previous years, was continued in and equipment in 1994 totaled DM 4.7 used for leasing and sales financing was
1994. We were able to make personnel billion (1993: DM 5.4 billion). If the DM 14.5 billion (1993: DM 13.7 billion).
cutbacks in a socially acceptable man- effects especially of the first-time
ner for the most part; only in exceptional inclusion of Fokker in 1993 are taken DM 8.7 Billion Expended for
cases were layoffs necessary. The into consideration, investments reached Research and Development Projects
number of employees also declined the same level as in the year before. The We spent a total of DM 8.7 billion
through the dissolution of divisions increase in intangible assets amounted (1993: DM 9.0 billion) on research and
and divestiture of business interests. to DM 0.6 billion. Depreciation and development. Included in this figure is
In many parts of AEG Daimler-Benz disposal of tangible and intangible DM 3.5 billion for contract-related
Industrie and DASA, working hours assets amounted to DM 5.9 billion. development services, incurred almost
also had to be shortened. We invested in new production exclusively by Daimler-Benz Aerospace.
technology, product diversification, and The group continues to place high value
rationalization measures. The focus of on environmental safety; our expenditu-
the investments was on Mercedes-Benz, res for environmental protection mea-
at DM 2.9 billion (1993: DM 2.6 billion). sures in 1994 came to over DM 680
In the Passenger Cars Division, the bulk million.
of the investment budget of DM 1.5
billion was allocated to production
preparations for the new E-class, the
new engine plant in Stuttgart-Bad
Cannstatt and the transition to water-
based paint technology. In addition, we
invested in production preparations for
Business Review
Mercedes-Benz spent a total of Platform satellites, as well as the Ariane
DM 3.3 billion (1993: DM 3.2 billion) booster rocket program. In the Defense
on research and development. The and Civil Systems Division, the focus
research and development work is the was on the Pars 3 LR program; in Pro-
basis for our promotional campaign in pulsion Systems, on the engine EJ2000
the area of passenger cars and for the Eurofighter and on the commer-
commercial vehicles. cial jet engine programs conducted
Mercedes-Benz AG, together with jointly with Pratt & Whitney.
Schweizerische Gesellschaft für
Mikroelektronic und Uhrenindustrie AG Consolidated Net Income
(SMH), established MC Micro Compact Climbs to DM 0.9 Billion
Car AG for the purpose of making a new The net income of the Daimler-Benz
type of vehicle intended especially for group in 1994 was DM 0.9 billion (1993:
densely populated urban areas under 0.6 billion). However, this increase does
the project title Micro Compact Car not reflect the full extent of improved
(MCC). A wholly-owned subsidiary of operating results, as a number of special
the joint venture took over the work of circumstances had influenced the figure
development and production prepara- for the prior year. The dramatic turn-
tion. The French town of Hambach was around in earnings is perhaps best
selected as the plant site. illustrated by the operating result, which
At AEG Daimler-Benz Industrie, jumped from DM -3.3 billion to DM 2.7
DM 736 million went into research and billion. The DM 6 billion increase inclu-
development in 1994 (1993: DM 764 des one-time income of DM 1.4 billion
million). The research pertained to our resulting from the deconsolidation of
modular 12X locomotive and new jet MBL Fahrzeug-Leasing GmbH & Co. KG
trains for regional rail systems, intelli- and income from the AEG Daimler-Benz
gent power components, systems and Industrie and Fokker divestments. DM
components for vehicle electronics, 1.1 billion (1993: DM 3.5 billion) were
airbag gas generators and sensors, and spent on restructuring measures.
optoelectronic infrared modules. Addi- Mercedes-Benz contributed DM 2.2
tional focuses were new component and billion (1993: DM -1.3 billion) to opera-
system concepts for medium-voltage ting profit. This increase was achieved
technology and for network control above all through expanded sales in the
technology at the station level, a new passenger car and commercial vehicle
generation of programmable logic business in Germany and important
control systems, and innovative modules foreign markets. In addition, our cost-
for the recognition of address fields and cutting programs led to significant
for mail distribution. savings. The expenditures for personnel
Daimler-Benz Aerospace spent restructuring measures were substant-
DM 4.3 billion (1993: DM 4.8 billion) ially lower than in the previous year.
on research and development. Of this The contribution of AEG Daimler-
figure, DM 3.4 billion was for projects Benz Industrie to consolidated results
carried out by third parties under was DM -0.1 billion (1993: DM -0.9 bil-
contract (including projects in progress). lion). The DM 0.8 billion improvement
In the Aircraft Division, the Airbus is related to the divestment of the
A330/340, Dornier 328 and Eurofighter Domestic Appliances Division and the
(EF 2000) programs were developed. power meters and lighting systems
The primary research focuses in Space units, with a book profit of DM 0.4 bil-
Systems were the ERS-2 and Polar lion. Moreover, expenditures for re-
structuring measures were lower
than in 1993.
The contribution of Daimler-Benz accounts payable trade, which also rose The economic upswing is expected
Aerospace to consolidated operating by DM 0.9 billion to DM 7.7 billion. The to pick up speed in Germany as well.
results improved, totaling DM -0.5 billion deconsolidation of MBL Fahrzeug-Lea- As in 1994, however, the primary growth
(1993: DM -1.0 billion). Earnings were sing GmbH & Co. KG and the sale of the factors will be export demand and, to an
limited by the persistently weak market AEG Daimler-Benz power meters, ligh- increasing extent, investments. Con-
for commercial aircraft as well as by ting systems and domestic appliances sumption in the private sector is likely
government budget cuts in the defense activities had the opposite effect on the to rally hesitantly at best, because of
and aerospace industry and the attend- balance sheet. Excluding the predomi- higher taxes and the associated lower
ant underutilization of capacities. Lower nantly third-party financed financial household spending latitude.
expenditures for structural measures services business, the percentage of The growing markets in Asia con-
had a positive effect. stockholders' equity increased from tinue to offer good sales prospects.
As in 1993, Daimler-Benz InterServi- 26% to 28%, while the percentage of Also, the countries of Latin America are
ces (debis) contributed DM 0.4 billion to stockholders' equity covering non- expected to gradually resume the
the group's operating profit. Its principal current assets was up from 78% to growth momentum of 1994 in the wake
source of income was the financial ser- 79%. As in the previous year, long and of the financial crisis in Mexico and its
vices sector, where business continued medium-term capital amounted to 60% negative consequences for the entire
to develop positively. The Systemhaus of the consolidated balance sheet total. Central and South American economic
and Mobile Communications Services region.
divisions experienced a significant Allocation of Earnings On the basis of the generally favor-
improvement over last year. The net income of Daimler-Benz AG able outlook for the global economy, the
The financial results shown in the increased to DM 565 million (1993: DM rising trend in the international auto-
consolidated statements of income 390 million). The improved results in the mobile business will also continue.
decreased significantly, from DM 2.0 operative area and the decrease in The Mercedes-Benz passenger car
billion to DM 0.2 billion. The decrease is restructuring expenditures meant that business in 1995 will be affected by the
largely the result of reduced earnings after losses in 1993, Mercedes-Benz introduction of the new E-class. A sales
from the sale of securities, which were AG returned a profit in 1994. The ab- decline in anticipation of the model
DM 1.4 billion lower than in the previous sorption of losses from AEG Aktien- change will be followed by an expected
year. Also, provisions totaling DM 0.6 gesellschaft and Daimler-Benz Luft- sharp upswing in the second half of the
billion (1993: DM 0.3 billion) were taken und Raumfahrt Holding AG, the parent year.
for losses on financial assets and company of the DASA group, decreased In the Commercial Vehicles Division,
securities. noticeably over the previous year. the development of our most important
At our Annual General Meeting on markets will probably allow additional
Balance Sheet Structure Marked May 24, 1995, we will propose that a sales growth. Particularly the Sprinter,
by Capital Increases dividend of DM 11 be paid per share of our new van in the 2.5 to 4.6 ton weight
Mainly as a result of the inflow of DM 50 par value (1993: DM 8). The total class, will provide additional stimuli in
liquid assets from the two capital dividend payment will thus amount to Western Europe. We expect competitive
increases undertaken in 1994, total DM 564 million. advantages from the merger of our bus
assets increased by DM 2.6 billion to activity with that of Karl Kassbohrer
DM 93.5 billion. Liabilities were also up, Outlook GmbH in the new company EvoBus
due to extensive liabilities from leasing The economic trend of the first GmbH.
and sales financing, which at DM 14.5 months leads us to expect favorable
billion were DM 0.9 billion higher than in business conditions to continue for
1993. The increase in business - above the remainder of 1995. While the U.S.
all at Mercedes-Benz - is reflected in economy will lose momentum because
of the restrictive rate of the U.S. Federal
Reserve Bank, accelerated growth can
be expected in Western Europe and in
Japan.
Business Review
Mercedes-Benz is betting on growth The invoicing of development
through new markets. In the coming services for the Ariane 5 carrier booster
years, it will develop buyer potentials by will bring about a sharp sales increase
tapping new regions and offering addi- for Space Systems. We are also likely to
tional attractive models. The promo- exceed last year's sales in Propulsion
tional campaign for passenger cars and Systems and in the Aircraft Division,
commercial vehicles will be accompa- where sharp increases are expected
nied by a comprehensive reorganization particularly from the Fokker 70 and
of the unit's internal structures and Fokker 100 aircraft programs and from
processes, and by increasing globaliza- the Dornier 328. In the Defense and
tion of the entire production chain. Civil Systems Division, however, a furt-
AEG Daimler-Benz Industrie expects her decline in sales looms. Daimler-Benz
its business volume to grow in 1995 in will continue to pursue the cost-cutting
all fields of activity, but especially in programs already initiated to ensure
microelectronics. growth and jobs in its core activities.
With the assumption of the industrial These measures include the further
management of TEMIC as of January 1, tightening of company structures at
1995, AEG Daimler-Benz Industrie has Fokker, a worldwide cooperation policy
now fully consolidated this company in and a global campaign to develop new
its financial statements. The increase in business opportunities.
sales connected with this move and with Daimler-Benz InterServices expects
the organizational allocation of MTU to be able to continue smoothly on the
Friedrichshafen will more than offset the favorable course established in 1994.
reduction in business volume resulting This positive outlook is based not only
from the disposal of the household on the momentum of the development
appliance, meter, and lighting systems in its service sector but also on restruct-
activities. uring measures, primarily in the debis
With a memorandum of under- Systemhaus Division, which already
standing, ABB and AEG Daimler-Benz showed the first signs of success in
Industrie announced on March 16, 1995 1994.
that they will be merging their activities Against the backdrop of a continuing
in the track-bound products sector in a positive trend in the general economic
fifty-fifty joint venture. The largest rail environment and the significantly en-
systems manufacturer in the world will hanced efficiency that we have realized
be established with the founding of in all group sectors, we are confident
ABB Daimler-Benz Transportation. The that we will be able to increase the
planned joint venture will have to be business volume of the Daimler-Benz
approved by the European cartel group once again and continue to
authorities. improve our net income. There are,
Daimler-Benz Aerospace expects however, uncertainties associated with
a slight increase in sales group-wide, the currency front if the volatility of
after adjustment for changes in the important currencies experienced in
consolidated group. the first few months of 1995 persists
for an extended period.
Business Review
Operating Activities of the Group
16 Mercedes-Benz
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Mercedes-Benz
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Mercedes-Benz
Corporate Unit AEG Daimler-Benz Industrie trend in orders at Modicon and in Sy-
In 1994, AEG Daimler-Benz Industrie achieved incoming orders totaling stems and Automation. In contrast,
DM 11.5 billion and sales in the amount of DM 10.3 billion. This growth was orders for Project and Drive Systems fell
essentially sustained by Rail Systems and Microelectronics. On the group below the 1993 level.
level, although net income clearly improved compared with the previous
year, it is still not satisfactory. For 1995, we are therefore continuing to DM 10.3 Billion in Sales
focus our primary goals on speeding up the reorganization of the company AEG Daimler-Benz Industrie's sales
by means of implementing structural and performance-improving measures in 1994 totaled DM 10.3 billion. Com-
in all business sectors. parably calculated, i.e., not including the
Domestic Appliances, Power Meter and
Lighting Systems activities, revenues
Delayed Recovery in the Slight Growth in Incoming Orders increased by 5% to DM 8.5 billion. Sales
Electrical Engineering Industry Incoming orders for AEG Daimler- revenues rose by 13% abroad, while re-
In the German electrical engineering Benz Industrie reached DM 11.5 billion venues in Germany fell by 2% compared
industry, the upward trend in the econ- in 1994. After making an adjustment for with the previous year.
omy was delayed. While foreign demand the value of the divested domestic Rail Systems and Microelectronics,
rose over the course of 1994, a slight appliances, power meter and lighting in particular, contributed to this largely
recovery in customer orders from Ger- systems activities, a growth of 6% satisfactory development. The growth in
many did not set in until the middle of results. On the German market, custo- Rail Systems is essentially based on high
the year. Production in the West German mer orders were up by 4% to DM 5.2 project invoicing in Germany and the
electrical engineering industry climbed billion, foreign orders climbed by 8%. U.S. In Microelectronics, the positive
by 4% compared with the previous year. In Rail Systems, incoming orders business trend of TEMIC TELEFUNKEN
Although capacity utilization did improve rose by 3%. The large orders of Deut- microelectronic is responsible for the
slightly, it was clearly below the level of sche Bahn AG, as well as orders for the increase in sales.
utilization at the beginning of the '90s. Berlin U-Bahn, the Metro in Guangzhou,
China, and the Airport Express Line in
Inconsistent Development among Hong Kong played a major role in this
Product Groups increase.
Development progressed at varying The incoming orders of the Micro-
rates among the individual product electronics Division showed especially
groups of the electrical engineering strong growth at 21%. This positive trend
industry. Incoming orders and sales was due solely to a marked increase in
continued to fall with respect to the customer orders at TEMIC TELEFUNKEN
capital goods that are significant for microelectronic GmbH. Above all, new
our company. This was especially true in orders for semiconductors, vehicle
Energy Systems Technology, which was electronics, and gas generators should
marked by cautious investment behavior be emphasized.
on the part of important customers, The Energy Systems Technology Divi-
primarily abroad. With price levels that sion did not match the incoming order
continued to decline, no recovery was volumes of the previous year; a decline
registered in Drive Systems. However, occurred in almost all power trans-
Controller Technology profited from the mission and distribution activities, as
upswing in manufacturing. well as in industry components and
The recovery process developed electrical machinery.
at an exceptional pace in electronic Because of several large orders in
components. As a result of the good Postal Automation, incoming orders
domestic and foreign economy, business were gratifyingly high. Moreover, in the
expanded, primarily in vehicle electro- fourth quarter of 1994, the newly
nics, telecommunications, and home acquired U.S. firm ElectroCom Automa-
entertainment electronics. tion was included in the consolidation
for the first time. The growth in Automa-
tion was also sustained by the positive
30 Daimler-Benz Aerospace
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Daimler-Benz Aerospace
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34 Daimler-Benz Aerospace
Corporate Unit Daimler-Benz InterServices The business trends regarding soft-
Following the upswing in the industrial services sector, debis increased its ware projects and products varied. The
sales 14% to DM 10.8 billion in 1994. Growth in the Mobile Communications Services, Telecommunications, Public
Division was especially good, in no small measure due to the acquisition of Sector, and Traffic subdivisions posted
Bosch Telecom Service. Significant growth rates were evident in the increases in incoming orders and sales.
Systemhaus and Financial Services Divisions. The internationalization In the Industry and Standard Software
of business activities was also a focus for Daimler-Benz InterServices. Products divisions, which operate in a
Restructuring measures were quite successful, especially in the area of difficult environment, we implemented
information technology. the majority of the restructuring mea-
sures decided on in the previous year.
The attendant optimization of business
debis Continues to Grow In addition, we partially restructured processes resulted in cost savings and
In the year under review, debis the refinancing of our domestic leasing personnel cuts in these divisions. Con-
raised consolidated sales by 14% to DM and financing businesses. Through the tingency reserves were available for the
10.8 billion. Because of the conversion investment of external partners in a resulting non-recurring expenses.
of the accounting system from the total vehicle holding company its sales are The software and management con-
cost method to the internationally no longer consolidated; the disposal sulting business at Diebold continued at
prevalent cost of sales method, interest revenues at the point when the contract the previous year's high level. The order
income from sales financing amounting expired are also no longer included in sposition was positive during the second
to DM 1 billion is now included under the consolidated sales. The sales trend six months especially.
sales; aside from minor inventory was also influenced by the fact that we The new joint venture with Mitsubi-
changes, this corresponds to the total expanded the sales financing business shi, debis Advanced Communication
output that we reported in previous more strongly than the leasing business. Services, began offering enhanced fax
financial years. A comparable effect was seen in the services in the fall of 1994. The aim here
In all divisions, further internation- countertrade area, through the change is to offer our customers innovative
alization contributed to the growth in in the proportions of the consulting services surrounding this widely used
sales. In terms of region, Germany business and own-account trading. transmission medium.
accounted for 55% of 1994 sales, the
partner countries of the European Union Systemhaus:
for 7%, the U.S. market for 29%, and Higher Profitability
other markets for 9%. debis Systemhaus was able to raise
The acquisitions of Bosch Telecom its sales by 9% to DM 1.8 billion and
Service, the Leipzig Data Processing make a positive contribution to profits.
Center and several other firms account- Computer Communication Services
ed for DM 0.1 billion of the higher sales (CCS) again contributed disproportion-
figure. This is a clear indication that ately to this result.
debis achieved the continuous growth We restructured the cooperation
primarily by its own efforts. with CAP-Gemini in Germany. While
maintaining the commitment in terms of
value, our French partner now holds a
19.6% investment in the overall activities
of Systemhaus. As part of this restruct-
uring, the separation of the individual
areas under corporate law was aband-
oned in order to give CCS and the
software projects and products the
opportunity to enter the market together
and under one name.
Insurance Brokerage:
Expansion of Third-Party Business
Through steady growth, especially in
the external commercial customer trade,
debis Assekuranz was able to raise the
commission earnings posted as sales to
DM 76 million. The premium volume
amounted to DM 0.7 billion. In further
developing the Insurance Brokerage
Division, we focused on the reinsurance
business.
Environmental Protection 45
high-grade plastic (polycarbonate) as a Cooperation with Mitsubishi
base material for new bumpers. The The joint research efforts of Daimler-
resulting paint sludge is then processed Benz and Mitsubishi Heavy Industries in
into secondary polyol, a high-grade base the field of recycling plastic and elect-
material. ronic waste were intensified in 1994,
Another focus of our recycling and the first phases were successfully
research at the Ulm Research Center is concluded.
the area of electronic waste processing. Through a feasibility study, we
Experimenting with new procedures, we proved that the planned recycling pro-
succeeded in separating metal, pre- cess is technically viable. Its economic
cious-metal and plastic fractions on a feasibility is being studied in trials at the
laboratory scale at a quality level never institutional level. In addition, joint
before attained, thus laying the ground- ventures with Mitsubishi in other areas
work for high-grade reuse of the indi- of environmental technology are being
vidual materials. considered.
In addition to the various recycling Building on the ecological balance
processes, we are also studying applic- sheet project begun in 1992, Daimler-
ation possibilities for renewable raw Benz and Mitsubishi are stepping up
materials. Besides the advantages of a work on an instrument that indicates
natural material cycle, these raw mate- environmental aspects of a component
rials also have an even C0 2 balance. The at the design stage. It will help the
use of renewable raw materials in tech- development engineer to recognize at
nology - for example, in natural-fiber- an early stage the ecological impact of
reinforced plastics - is only an inter- the materials used and of the production
mediate step toward the production of and disposal or reclamation processes.
so-called "ecocomposites" in a biological
recycling process. In these fiber-
reinforced plastics, not only is the fiber
made of a renewable raw material, but
the plastic is also made from vegetable-
based oils. In addition to studying mate-
rial properties, we are also developing
suitable processes for economically
recovering the usable fibers and oils
from plants and processing them into
components. The first concrete results
of these efforts have already been
carried over into series production.
Parallel to the research into the use
of new types of materials, we are also
investigating new possibilities for
environmentally friendly processing of
conventional components. For instance,
our goal in the dry processing project
was to find new production processes
and tool materials that would eliminate
the need for the ecologically unsound
cooling lubricants still necessary in
many areas.
46 Environmental Protection
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Personnel
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50 Personnel
Junior Staff Development Human Resource Development Thanks to Our Employees
An important strategic task of the The strategic orientation at Daimler- We could not have achieved our
Personnel department is the develop- Benz requires a continuous, targeted renewed success without the efforts of
ment of a qualified junior staff. In 1994, professional development program for our employees. We extend our thanks to
in the context of our International Junior employees. everyone, and especially to the mem-
Management Group, we offered 50 The change processes within the bers of the labor councils and manag-
college graduates with internationally group have the primary goal of confer- erial committees at all levels of the
oriented training an opportunity to ring decision-making authority and group, for their great commitment.
qualify for higher-level positions in the responsibility on our employees and
group through project assignments in promoting independent managerial
Germany and abroad. Overall, some 200 action at all levels. This idea is fostered
junior management positions are not only through specialized continuing
provided in the group. education but also through the newly
To expand the development of junior implemented variable compensation
management staff beyond the filling of plan.
existing positions, we offered 100 To add impetus to the growing desire
college graduates a one-year internship for new tasks and positions, we have
to facilitate their entry into their career adopted a policy of assigning a manage-
field. Complementing this initiative were ment executive to any given task for a
additional programs and models in the limited term only. An internal publication
corporate units, such as part-time listing open management positions
opportunities at the entry level. We throughout the group, also serving to
continued to foster and expand our make employees' areas of competence
contacts with colleges and universities, as broad as possible.
and with students at both undergraduate Another emphasis in personnel
and graduate levels. development is the international orient-
We also devoted special attention to ation of employees. Along with sponsor-
developing and securing junior technical ship of the International Junior Manage-
personnel, to maintain our preparedness ment Group, our primary goal is to make
for expected medium- and long-term our German employees into even more
needs. competent players in international busi-
At the end of 1994, there were ness through job rotation, international
11,200 young people in vocational project work and network forums.
training at our German locations, and
of these, 2,967 had begun their training Preventive Health Care and
during that year. We provided training in Occupational Safety
nearly 60 industrial/technical and 10 In our corporate social policy we
commercial career fields. In addition, place great emphasis not only on
we have 15 special training programs traditional preventive health care, but
for high-school graduates, particularly also on the promotion of good health.
in professional academies. Our goal is to promote healthy behavior
Again the acceptance of trainees among our employees and to make
posed problems. We tried to consider them conscious of their individual
the interests of our young employees responsibility for their own health. We
along with our own, through limited-term consider this an investment in the
and part-time contracts as well as a future.
number of permanent placements. For needs related to industrial health
and safety, we employed some 200 full-
time safety officers in Germany alone.
They provided advice and support in all
matters of safety in the workplace.
Personnel
The Company´s Role in Society 1994 we established a Daimler-Benz
In public relations work, our activity in 1994 was focused on supporting scholarship program for students at
and promoting the globalization of the group through appropriate Beida University, the largest and oldest
communication measures. One emphasis was the establishment of addi- of the renowned institutions of higher
tional group representation and liaison offices worldwide. We expanded learning in Beijing. In this program, we
our social welfare activity by awarding scholarships to Chinese students. not only grant scholarships to students
with outstanding grades; we also provide
stipends for room and board for stud-
Expansion of the Worldwide Public International Presence Enhanced ents from low-income families through-
Affairs Network Through group presentations and out the entire four years of study.
In 1994 we continued with the informational events, as well as through However, involvement and dialog
development of group representation greater participation in fairs and exhibi- also require willingness to take a stand
and liaison offices begun in 1989. The tions in the Pacific Rim and NAFTA, we at home and abroad on current socio-
network now covers all strategically focused on regional interests in the political issues. For instance, in co-
significant regions. We have representa- portrayal of our range of products and operation with political, humanitarian,
tion in the important European cities of services, just as we do in Europe. Ex- and scientific institutions, we tackled
Berlin, Bonn and Brussels, as well as in amples are the group exhibitions on the subjects of xenophobia and vio-
Washington, Moscow, Beijing, Mexico traffic and environmental technology in lence. In the model Youth Against
City, Tokyo and Jerusalem; there are Hanoi and Ho Chi Minh City, Waste-Tec Violence project, we are working with
group liaison offices in London, Paris, in Tokyo and Technogerma in Mexico. others to develop concrete solutions.
Singapore, Hong Kong, Cairo, Sao Paulo, We also increased our press and media
Mulgrave and Pretoria. These group presence in the most important regions.
representation and liaison offices per-
form tasks that are very important to our Enhancement and Concentration of
internal and external communication as International Youth Advancement
well as to our entry in the markets. They In the interest of continuity, our
support our operating divisions by corporate grant activities are based on
accompanying political delegations as long-term cooperation with international
they endeavor to open new trade institutions. Especially in regions of
channels, particularly in the developing growing significance to our business, it
markets of the Far East, Mexico/NAFTA is important that the Daimler-Benz
and the Middle East. The network is an technology group enjoy respect and
important early warning system for public sympathy, not only because of
changes in the general political and the technology and quality standards of
socioeconomic climate. Finally, it its products, but also because of its
ensures that our active employees in the public-mindedness and willingness for
respective regions are kept abreast of dialog. We aim to be a responsible corp-
corporate activity beyond their own orate citizen in the countries in which
work areas. we do business and are prepared to
accept the duties that go along with it.
Since 1991, our Award of Excellence
program, which includes thousands of
high schools and over 200,000 young
people, has made it possible for stud-
ents from the U.S.A. and Canada to
spend several weeks in Germany. In
The rise in the consolidated net income in 1994 from DM 0.9 billion (1993: Total selling expenses increased by
DM 0.6 billion) inadequately reflects the improvement in performance in DM 0.2 billion to DM 11.1 billion; as a
the operative area, since the previous year's figure was characterized by percentage of sales they remain at 11%.
high non-recurring earnings. The net income determined on the basis of The absolute level of general administra-
U.S. accounting principles (U.S. GAAP) shows a turnaround from DM -1.8 tive expenses dropped by DM 0.2 billion
billion to DM 1.1 billion. The operating profit also improves clearly from to DM 3.3 billion, so that the correspon-
DM -3.3 billion to DM 2.7 billion. ding percentage is only 3.2% (1993:
3.5%).
Of the basic types of expenses
Statements of Income According on the functional areas of production, contained in selling and general admini-
to Cost-of-Sales-Method sales, and general administration, strative expenses, personnel expenses
In 1993, for the first time for a Ger- another factor distinguishing the cost- decreased by DM 3.7 billion to DM 30.1
man company, we published a reconcil- of-sales-method from the previously billion, reflecting the lower number of
iation of net income and stockholders' used total-cost-method is that interest employees and lower additions to
equity according to the German income from the sales financing busi- restructuring provisions. In contrast,
Commercial Code to values under U.S. ness and interest expenses from the as a result of the pronounced increase
GAAP. The response of the financial refinancing of leasing and sales finan- in production at Mercedes-Benz, the
press and the widespread approval by cing activities are no longer recorded costs of materials rose considerably by
analysts and investors have confirmed under interest income net, but rather DM 5.2 billion to DM 56.3 billion.
that the international financial world under sales or cost of sales. The financial result in 1994 was low
welcomed our step. (DM 0.2 billion) as compared to 1993
The financial analyses since pub- Consolidated Net Income Up by (DM 2.2 billion) showing much higher
lished on Daimler-Benz reveal that in DM 280 Million to DM 895 Million figures due to the sale of securities.
their statements and recommendations, The consolidated financial state- Another negative element was the fact
leading financial analysts rely predomi- ments according to the German Com- that provisions had to be made for
nantly on U.S. figures. The most import- mercial Code were characterized in losses on the investment portfolio and
ant reason is perhaps that American 1994 by a substantial improvement of securities due to the drop on the bond
accounting practices are accepted operating income; non-recurring income market.
worldwide, and hence allow accurate is included to a much lower extent than Calculated on comparable bases, the
comparisons irrespective of a comp- in 1993. results from ordinary business activities
any's home base. Therefore, we will Sales rose by 5.6% to DM 104.1 clearly improved from DM -1.5 billion to
continue to observe the trends in inter- billion in 1994. Of critical importance to DM 2.1 billion.
national accounting with utmost care, this development was the strong growth After subtracting the income taxes,
and we will also critically participate in in business volume at Mercedes-Benz. which rose from DM 0.5 billion to
the discussion of future developments debis too was able to achieve a marked DM 1.2 billion as a result of increased
in the interest of providing maximum increase in sales. In contrast, revenues profits of the foreign Mercedes-Benz
disclosure and improved quantitative decreased at AEG Daimler-Benz Indu- production and sales companies, net
information to our investors. strie, based on changes in the con- profit is up from DM 615 million to
To best meet these goals, we have solidated group, as well as at DASA, DM 895 million. This increase inade-
changed the presentation of the state- due to the persistently poor demand for quately reflects the improvement of the
ments of income to the internationally aircraft and budget restrictions in the operating profit from DM -3.3 billion to
accepted cost-of-sales-method; data for public defense and aerospace areas. DM 2.7 billion. Non-recurring income of
1993 have been reclassified accordingly. After subtracting the cost of sales, DM 1.4 billion was included in 1994 as
Aside from recording expenses based which because of cost-cutting measures well, of which DM 0.6 billion related to
showed a disproportionately low increa- the deconsolidation of MBL Fahrzeug-
se of DM 0.4 billion to DM 90.3 billion,
and which dropped from 91 % to 87% as
a percentage of sales, the gross profit
rose by DM 5.2 billion to DM 13.8
billion.
The consolidated financial state- Accounting and Valuation Buildings are depreciated using the
ments have been prepared in accord- Where the circumstances are the greater of the straight-line method or
ance with German generally accepted same within the consolidated group, the declining balance method. Moveable
accounting principles ("German GAAP"). assets and liabilities are valued uni- property in Germany having a useful life
All amounts shown herein, unless formly in the consolidated financial of four years or more is depreciated
separately stated, are in millions of statements. using the declining balance method.
German marks ("DM"). Intangible assets are valued at We employ the straight-line depreciation
The 1994 income statement has acquisition cost and are amortized on a method as soon as even distribution of
been prepared according to the inter- straight-line basis over their respective the residual book value over the remain-
nationally prevailing cost-of-sales useful lives. Goodwill resulting from ing useful life yields larger depreciation
method for the first time. The figures capital consolidation is amortized over a allowances. For foreign companies,
for the prior year were classified period of five years, providing it relates moveable property is depreciated for
accordingly; the net income remained to the expansion of the group. Where it the most part using the straight-line
unchanged. relates to the restructuring of the group, method.
According to the cost-of-sales it is charged to retained earnings. Good- Depreciation on plant, property and
method, operating expenses are will resulting from strategic alliances is equipment additions in Germany during
assigned to the functional areas of split; the amount relating to the expan- the first and second half of the year is
manufacturing, distribution and general sion of the group is charged to earnings calculated using full or half-year rates,
administration. The manufacturing costs and the amount relating to restructuring respectively, on the basis of the tax
of sales-generating activities are ident- is charged to retained earnings. simplification rule. Items having an
ified in the statements of income under Property, plant and equipment is immaterial value are expensed when
cost of sales. This item also includes the valued at acquisition or manufacturing purchased.
expenses for personnel and materials for cost - less accelerated depreciation. Investments in affiliated companies
research and development, as well as Additional depreciation is recorded and other financial assets are valued at
for warranties and the depreciation of where a lower reported amount is the lower of cost or market; long-term
inventories. Also included in the cost required. In addition, where applicable, non-interest or low-interest bearing
of sales is interest expenses from accelerated depreciation methods are loans are recorded at present value.
refinancing the leasing and sales used in Germany pursuant to certain Significant investments in associated
financing business, which in previous sections of the German tax guidelines. companies are valued at-equity
years was listed under net interest The manufacturing costs of comp- according to the book value method.
income. The interest income previously any-built equipment and facilities cover Leased equipment is valued at
included in the net interest income from direct costs, as well as allocable over- acquisition or manufacturing cost. It is
the sales financing business is now head costs of materials and manufact- depreciated to residual value primarily
recorded under sales, resulting in a uring, including depreciation. using the declining balance method.
slight change of the figure for the Property, plant and equipment is We employ the straight-line depreciation
previous year. depreciated over the following useful method as soon as even distribution of
In the financial results we have lives: 10 to 50 years for buildings, 8 to the residual book value over the
summarized the income from affiliated, 20 years for site improvements, 3 to 20 remaining useful life yields larger
associated and related companies, net years for technical equipment and depreciation allowances.
interest income and other financial machinery and 2 to 10 years for factory,
results; the individual components office and other equipment. If equip-
are explained in Note 26. ment is used in multiple-shift opera-
tions, the useful life is reduced
accordingly.
Currency Translation
Foreign currency assets are translat-
ed at the lower of the entry date ex-
change rate or year-end exchange rate;
foreign currency liabilities are translated
at the higher of the selling rate on the
entry date or at the year-end selling
rate.
The year-end exchange rate is
generally used to translate balance
sheet items of foreign companies from
the respective local currency to German
marks. Excluded from this treatment are
the non-current assets and inventories
of companies in highly inflationary
countries, where historical exchange
rates are used.
At December 31, 1994, intangible assets amounting to DM 880 million (1993: DM 523 million)
consist of goodwill, acquired computer software, patents and, to a lesser extent, advance
payments. The increase over the previous year is related primarily to the acquisition of
ElectroCom Automation, U.S.A.
The year under review included additional amortization amounting to DM 9 million (1993:
DM 88 million).
The decrease in property, plant and equipment by DM 1,194 million to DM 17,727 million is a
result of DM 4,918 of depreciation expense, DM 757 million in disposals, DM -162 million in
currency fluctuations and DM -9 million in reclassifications; this amount is offset by DM 4,652
million in additions. In accordance with tax regulations, depreciation of DM 326 million (1993:
DM 76 million) was taken. Non-scheduled depreciation amounted to DM 148 million (1993:
DM 287 million).
As part of the first inclusion of subsidiaries, capital expenditures and depreciation increased
by DM 353 million and by DM 223 million, respectively.
The financial assets of DM 7,423 million (1993: DM 4,031 million) primarily include securities
in non-current assets and participations in associated companies.
The increase in financial assets is related primarily to the addition of MBL Fahrzeug-Leasing
GmbH & Co. KG which is now included as a 20% share under financial assets instead of being
consolidated. Moreover, due to an altered investment strategy, securities with fixed interest
rates were reallocated from current assets to non-current assets.
Non-scheduled depreciations amounting to DM 253 million (1993: DM 298 million) were
recorded in participations and participations in associated companies.
The decrease in leased equipment of DM 1,670 million to DM 10,209 million reflects primarily
the deconsolidation of MBL Fahrzeug-Leasing GmbH & Co. KG, effective June 30, 1994.
In accordance with the provisions of tax law, depreciation has been recorded in the amount of
DM 8 million (1993: DM 5 million).
The majority of the inventory is owned by Mercedes-Benz and Daimler-Benz Aerospace. The
decrease in 1994 is mainly due to a decrease in inventory levels at the foreign Mercedes-Benz
sales companies and fewer semifinished goods at Airbus and Fokker.
This item represents receivables from customers in the amount of DM 10,151 million (1993:
DM 8,771 million), of which DM 5,831 million (1993: DM 5,569 million) are long-term
receivables. An allowance for losses of DM 236 million has been recorded on these
receivables.
In 1994 we purchased a total of 78,705 treasury shares at an average price of DM 823 per
share to transfer to employees of Daimler-Benz AG and the corporate units and to fulfill the
exchange offer still in effect for AEG shareholders. Of this, 46,700 shares are allocated to the
capital increase for issuing employee shares and 32,005 shares to acquisitions in the market
(5,702 in March, 6,701 in April, 9,703 in October, 56,380 in November and 219 in December).
In November 1994, Daimler-Benz AG and the corporate units sold 46,969 shares (par value of
DM 2.3 million, or 0.09% of equity) to employees at a discounted price of DM 532 per share.
As part of the exchange offer, AEG shareholders received 31,736 Daimler-Benz shares. No
treasury stock was on hand on December 31, 1994.
Other securities consist primarily of fixed-interest debt instruments.
Certain current assets could have been increased by DM 22 million to their original values in
accordance with German GAAP; however, the revaluation was not recorded due to a negative
effect on currently payable income taxes.
This item primarily reflects deferred rents, interest, insurance premiums and discount sums of
DM 26 million (1993: DM 16 million). In contrast to the previous year, at December 31, 1994,
deferred taxes generated from elimination procedures affecting income were reported as a
liability.
The offsetting of goodwill against stockholders' equity is based primarily on the acquisition of
all shares in Bayerische Beteiligungsgesellschaft fur Luft- und Raumfahrtwerte mbH, Munich,
which in turn holds 10% of the shares in Daimler-Benz Luft- und Raumfahrt Holding AG, Munich.
The capital stock increased by DM 235.3 million to DM 2,564.9 million through the capital
increase in June 1994 in the amount of par DM 233.0 million and the capital increase for
issuing employee shares in November 1994 in the amount of par DM 2.3 million. Following
these two capital increases, the number of votes is 51,298,736.
Of the DM 600 million of additional share capital approved on June 26, 1991, the remaining
amount is DM 367.0 million, which may be utilized until June 30, 1996. Of the DM 20 million
of additional share capital for issuance of employee shares approved on May 18, 1994, the
remaining amount is DM 17.7 million, which may be utilized until April 30, 1999. In addition,
as authorized by the shareholders on May 18, 1994, the company maintains authorized but
unissued capital in the amount of DM 300.0 million which is intended for the extension of
subscription rights to the holders of convertible bonds and options issued by the Board
of Management. No use has yet been made of this authorization, which extends through
April 30, 1999.
The increase in paid-in capital to DM 4,904 million (1993: DM 2,117 million) is to be attributed
to the premium from the two 1994 capital increases.
The interest held by third-parties in the stockholders' equity of the consolidated subsidiaries
primarily consists of AEG Daimler-Benz Industrie, Daimler-Benz Luft- und Raumfahrt Holding
AG, Mercedes-Benz (Switzerland) AG, Dornier, MTU and Eurocopter.
In addition to the above, a negative minority interest amounting to DM 973 million relates to
Fokker.
Pension accruals have increased by DM 391 million to DM 13,150 (1993: DM 12,759 million) as
a result of the annual increase in pension provisions.
The pension accruals and the plan assets of the external pension plan fully fund the company's
pension obligations.
12/31/94 12/31/93
18 Other Provisions DM in mill. DM in mill.
The selling and general administrative expenses include restructuring costs amounting to
DM 1,114 million (1993: DM 3,486 million). Interest expense from leasing and sales financing
business included in the cost of sales is DM 918 million (1993: DM 1,139 million). Miscel-
laneous taxes total DM 297 million (1993: DM 390 million).
Other operating income primarily includes income from dissolved provisions in the amount of
DM 1,610 million (1993: DM 2,348 million). This item also includes income from the sale of
corporate units and from deconsolidations in the amount of DM 1,029 million and income from
land sales, which for the most part were further committed based on depreciation methods
pursuant to German tax law.
DM 2,718 million (1993: DM 3,581 million) of the other operating income relates to other fiscal
years.
Other operating expenses include increases to provisions that cannot be allocated to selling
and general administrative expenses as well as expenses from investment disposals.
DM 121 million (1993: DM 224 million) of the other operating expenses relates to other fiscal
years.
The income taxes of DM 1,182 million (1993: DM 515 million) primarily represent income taxes
of the foreign Mercedes-Benz group companies.
The net group income of DM 895 million was influenced by statutory depreciation of financial
and current assets as prescribed by German tax law in the amount of DM 270 million. Future
effects are immaterial.
Derivative financial instruments are used to hedge against interest rate and currency risks.
They primarily cover the basic supplier and services transactions. They are used to a minor
extent to optimize the interest rate and currency results. Contracts are signed only with
reputable international financial institutions.
The derivative financial instruments are subjected to risk checks appropriate to the extent of
the transactions and are executed under strict functional division into trade, administration,
documentation and control. The necessary critical organization and work procedures are
stipulated by internal guidelines. The effectiveness of the internal controls and the reliability of
the procedures are subjected to continual examination. For decision-making purposes, the
current risk positions are presented in each case based on regular, standardized financial
reports.
The currency instruments relate primarily to future exchange transactions and options in the
currencies of the major industrialized countries. The interest-rate instruments primarily include
interest-rate swaps and combined interest-rate/currency swaps, forward rate agreements,
futures and related options. The face values are calculated from the non-balanced sum of all
buy and sell amounts for derivative instruments. The market values are derived from the prices
at which the derivative instruments are traded or quoted on the balance sheet date without
taking into account contrary trends in the basic transactions.
Executive Bodies
Under the presumption that the proposed dividend is ratified by the shareholders at the
Annual Meeting on May 24, 1995, the remuneration paid by the group companies to the
members of the Board of Management and the Supervisory Board of Daimler-Benz AG
amounts to DM 16,759,041 million and DM 1,736,035 million, respectively. Disbursements
to former members of the Board of Management of Daimler-Benz AG and their survivors
amount to DM 12,271,514 million. An amount of DM 90,943,099 million has been accrued in
the financial statements of Daimler-Benz AG and Mercedes-Benz AG for pension obligations to
former members of the Board of Management and their survivors. As of December 31, 1994,
advances and loans to members of the Board of Management of Daimler-Benz AG amounted
to DM 58,017. Home mortgages included herein are not subject to interest; other loans and
advances bear interest averaging 5.5%. During 1994, DM 111,846 of outstanding loans was
repaid. The terms for home mortgages are ten years and less than one year for loans and
advance payments.
Auditor's Report 85
Supervisory Board
Supervisory Board
Report of the Supervisory Board
Selected areas of focus were the At its meeting on June 29, 1994,
measures for globalization and localiz- the Supervisory Board designated Mr.
ation and for strengthening our interna- Schrempp to succeed Mr. Reuter as
tional competitiveness. Highlights were Chairman of the Board of Management
the restructuring at AEG Daimler-Benz effective from the date of the Annual
Industry, the selling off of the household General Meeting on May 24, 1995.
appliance and cable harness activities Thus, the future leadership of the
as well as meters and lighting systems, group was clarified at an early date.
the joint ventures with CEGELEC and At the meeting on November 2,
Magna, and the acquisition of ECA in the 1994, we then made further decisions
Postal Automation Division. Highlights regarding appointments to the Board of
for Mercedes-Benz were the takeover Management after the Annual General
of Kassbohrer and the decision for the Meeting on May 24, 1995. Dr. Hirsch-
In 1994, the Supervisory Board held Micro Compact Car. For Daimler-Benz brunn, Personnel, and Dr. Liener,
four regular meetings. Independent of Aerospace, we thoroughly discussed the Finance and Materials, will leave the
these, the Executive Committee, which development at Fokker as well as the Board of Management at this time. Dr.
is also responsible for the contractual pan-European cooperative ventures. Gentz will assume the management of
affairs of the Board of Management, Other important topics commanding the both departments at the same time.
met three times. The Balance Sheet Supervisory Board's attention were the Dr. Mangold was appointed to the board
Committee dealt thoroughly with the 1994 capital increase, refinancing and effective April 1, 1995. He will succeed
mid-year report, as well as the financial sales financing (e.g. aircraft leasing) Dr. Gentz as President and Chief
statements for the entire year. There and the Potsdamer Platz project in Executive Officer of Daimler-Benz
was no need to convene the conference the corporate unit debis. InterServices (debis) effective May 25,
committee formed pursuant to the Law The developments listed testify to 1995. In the corporate unit Daimler-
on Codetermination. the fact that the Board of Management Benz Aerospace, Dr. Bischoff has
In addition to providing periodical has defined the challenges arising from been appointed as the successor of
reports on the course of business, the the markets and implemented approp- Mr. Schrempp effective May 25, 1995.
Board of Management reported in detail riate measures to maintain the inter-
on the position of the corporation and national competitiveness of the
basic business policy. We were also corporation.
informed in detail about the develop- The Supervisory Board is satisfied
ment of the corporation through that the accounting, the annual financial
numerous other reports on the general statement of December 31, 1994, and
situation and on special topics, which the consolidated business review for
we discussed thoroughly with the Board Daimler-Benz AG and the group were
of Management. audited by KPMG Deutsche Treuhand-
Among the topics addressed were Gesellschaft AG auditing company in
the details of the medium-term business Frankfurt/Main and affixed with the
plan, including the investment, employ- unqualified audit certificate. In our own
ment and profit plans, and the develop- thorough examination, we found no
ment of the group structure and signifi- grounds for complaint, and we agree
cant individual business transactions. with the findings of KPMG. With the
approval of the Supervisory Board, the
annual financial statement is hereby
ratified. We concur with the proposal of
the Board of Management regarding the
allocation of unappropriated profit.
South Africa
1) With general power of procurement.
CHRISTOPH KOEPKE
2) Also deputy member of the Mercedes-Benz
Board of Management without an own P. O. Box 1717
department. Pretoria 0001
96 Notes to the Reconciliation of Consolidated Net Income and Stockholders' Equity to U.S. GAAP
Balance Sheet Press Conference:
Daimler-Benz AG
IR
70546 Stuttgart
Telephone: 49-711-1 79 22 87
Telefax: 49-711-1 79 41 09